ITC Q3 net up 8.4%, shares fall 1%

Mumbai: India’s top cigarette maker, ITC Ltd, on Monday matched market expectations with an 8.4% rise in quarterly profit, but its revenue growth disappointed and sent its shares down 1%.

ITC, 31.7% owned by British American Tobacco, said revenues and profits were hit by a slowdown in its hotels business as corporate travel fell in the wake of a slowing economy and militant attacks in Mumbai in November.

The company said net profit rose to Rs900 crore ($185.2 million) in its fiscal third quarter ended 31 December from Rs830 crore a year earlier, while gross revenue rose 8% to Rs59.2 billion from Rs54.8 billion.

“Its profits were more or less in line with what we had expected but we expected the topline to grow more, especially the agri business,” said Aashish Ubganlawar, analyst with brokerage Sharekhan.

ITC said profit from its hotels fell 34% from year ago and revenue dropped 14% as it cut room rates in the wake of poor occupancy.

“It was much more than what we expected,” Ubganlawar said. The brokerage had estimated net profit to rise 8.8% and sales to climb more than 16%.

ITC said higher prices from its filter cigarettes helped drive profits even as a ban on smoking in public places curtailed sales. Cigarettes contributed about 66% of gross revenue.

High commodity prices and store rentals, costs involved in building its personal care portfolio and investments on expanding its distribution network also put pressure on its profitability, the company said.

In the agri segment, revenues fell 6% due to lower soya volumes, while sales of branded packaged foods were modest, it said.

“The spillover inflationary impact of input commodities along with the high fuel prices significantly impacted margins during the quarter,” the company said.

Shares in ITC, which has market value of $13.3 billion, ended down 1% at Rs170.55 in a flat Mumbai market. The stock had fallen 18.4% in 2008, when the main index lost more than half its value.